Key market-moving themes
- Israel-Iran conflict quick descalation;
- Q1 GDP growth revised lower and PCE slightly hotter than expected;
- Powell’s Congress speech: first signs of dovishness – ‘rate cuts could come sooner rather than later’;
- US-China trade agreement – China agrees to supply rare earths in exchange for the lifting of US countermeasures – and eyes agreements with 10 key partners;
- US banks stress tests: all 22 banks successfully passed – less severe conditions than in 2024.
Our view
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Tariffs – potentially more news on agreements with 10 major trading partners: Markets started to price these major agreements last week. A clear confirmation would mean markets can finally turn the page - US overweight vs. Europe; buy on dips;
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Powell’s speech at ECB’s Sintra Forum: Potential confirmation of first signs of dovishness shown last week - More dovish signs are another short-term catalyst for US equities;
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Big Beautiful Bill vote in Senate: Less relevant given section 899 cancelled -Relatively uneventful since the market-sensitive section 899 has been removed.